Bruised firms not ready for another budget battering, says BCC survey

Thursday, 9 October 2025 22:30

The UK's largest business sentiment survey before next month's Budget, shows most firms remain bruised, with no improvement to business sentiment. The British Chambers of Commerce (BCC) Quarterly Economic Survey for Q3 has found confidence and investment levels remain at 2022 levels. Less than half of responding firms (48%) are expecting increased turnover in the next 12 months, while 21% expect a decrease. Meanwhile, only 21% have increased investment and 25%...Request free trial

Less than half of responding firms (48%) are expecting increased turnover in the next 12 months, while 21% expect a decrease. Meanwhile, only 21% have increased investment and 25% have scaled back plans.

The data also shows tax remains the biggest concern for businesses alongside increased worries over inflation.

The survey was carried out by the BCC Insights Unit and the UK-wide Chamber network, with the fieldwork conducted between 18 August and 15 September. Over 4,600 businesses across the UK (91% of whom are SMEs) responded online.

Confidence flatlines ahead of the Budget

Confidence among business remains flat, with only 48% of responding firms expecting their turnover to increase over the next 12 months. That compares with 49% in Q2 and 58% before the 2024 Budget. A fifth (21%) of businesses expect turnover to worsen and 32% expect no change.

The data show wide sectoral disparities. Only 35% of retailers expect increased turnover in the next 12 months (44% in Q2), while the figure in the hospitality sector is 38% (33% in Q2).

Tax and inflation are the top concerns for business

Following the employer National Insurance Contributions (NICs) rise in April, tax continues to be the biggest concern for businesses. 59% cite tax as a worry, up from 56% in Q2. Before last year's Budget, only 36% cited tax as a concern (Q2 2024).

There has been a sharp rise in concern about inflation, cited by 57% of firms (52% in Q2), the highest level since the start of 2024. Worries about interest rates remain at relatively low levels – cited by a quarter of responding businesses (25%).

A quarter of businesses cutting back on investment

With businesses facing increased cost pressures, investment levels continue to suffer. A quarter of businesses (25%) say they have cut back on investment plans (broadly similar to 24% in Q2). The majority of firms, 54%, say their investment strategy has remained the same, while 21% have increased their plans.

The issue is more marked in certain sectors, with over a third of hospitality firms (35%) scaling back investment plans (39% in Q2). While the figure for those in the retail sector is 30%.

No improvement in business conditions

The percentage of responding businesses reporting increased domestic sales remains unchanged from last quarter – at 32%. 43% reported no change and a quarter (25%) said they had seen a decrease in sales. Sectoral breakdowns show increased sales are at their lowest among retailers (21%).

Around a quarter of businesses (24%) report an increase in cash flow over the last three months, down from 26% in the previous quarter. A third of firms (29%) report a fall in cash flow, while for 46%, cash flow remained the same.

Price rise expectations remain high

The proportion of businesses expecting to raise their prices in the next three months remains high at 44%. That's the same level as Q2 but down from a near-historic high of 55% in Q1. Just over half (54%) say their prices are likely to remain the same, and only 3% are expecting them to decrease.

Labour costs continue to be far and away the main cost pressure for firms, cited by 72% of respondents (73% in Q1). The issue remains the most significant in the hospitality sector (80%) and the transport sector (78%).

What businesses say:

“The uncertainty around future tax increases to business is directly affecting investment and recruitment decisions we are making. Projects are going on hold over the next couple of months until the end of the year.”

Medium sized manufacturing firm in Liverpool

“National insurance increase was a disincentive to further employment, and as a business we cannot cope with further taxation.”

Small manufacturing firm in Scotland

“Increases in national insurance contributions and also uncertainty on how favourable the UK government will treat business in the future are a concern.”

Micro professional services firm in Northern Ireland

“Costs are spiralling out of control in almost all cost areas.... The burden of taxation is becoming too high to live with.”

Medium sized transport firm in Aberdeen

David Bharier, Head of Research at the British Chambers of Commerce, said:

“Ahead of the Chancellor's statement next month, our survey shows many firms remain bruised and are not ready for another Budget battering. The research reveals no clear improvements to key indicators we track. For twelve months, SMEs have told us the same story: rising costs, weak investment, and little sense of relief on the horizon.

“The Employer NICs increase has been the most widely cited source of pressure, hitting investment and pushing up prices. The proportion of businesses expecting to raise prices remains worryingly high, driven primarily by labour costs. Inflation now sits alongside taxation as a top concern. The global shift towards protectionism and tariffs has also been a major compounding factor.

“Persistent weak sentiment this quarter may suggest that many firms have already priced in a tough Budget. But further surprise measures that hit business, like those seen in 2024, could drive confidence even lower.

“What businesses need now is certainty and a long-term strategy, not more ad hoc policy shifts. The AI revolution could be a real productivity game changer and our recent research shows that more SMEs are adopting it, but firms need the space to invest and adapt if the UK is to seize the opportunity.

“Our message to the Chancellor ahead of the Budget is clear – no further tax rises on business. SMEs are calling for urgent action to tackle skills shortages, a bold push to boost exports, and more investment in infrastructure. Without that, confidence could deteriorate further, putting economic growth at risk”.

ENDS 

Notes to editors:                    

Spokespeople are available for interview.           
An info sheet highlighting some of the main results is available here.
The results on recruitment will be published later this month.
The Q3 results are based on responses from 4,669 businesses online with the fieldwork carried out between 18 August and 15 September.
91% of respondents are SMEs (fewer than 250 employees), 77% are in the service sector, 23% in the manufacturing sector and around 43% are exporters.
Further data breakdowns for Q3 QES data and graphics can be made available upon request from the BCC press office.
Due to rounding, not all percentages will add up to 100%.
The QES is produced by the BCC's Insights Unit and the Chamber of Commerce Network across the UK.          About the BCC Insights Unit       The British Chambers of Commerce (BCC) sits at the heart of a powerful network of 51 Chambers of Commerce across the UK, representing tens of thousands of firms. It provides a unified voice for these companies, rooted in their communities, at the national level. We link our UK network with over 75 international member chambers, to promote trade and investment, and work for a better future for businesses around the world.    
    
About the British Chambers of Commerce - Where Business Belongs
The BCC Insights Unit brings together all the strands of research the BCC undertakes, including the Quarterly Economic Survey, the largest private sector business survey in the UK. Our research is used extensively across the UK Government, Bank of England, and global institutions such as the IMF. It was launched in July 2023.   
 
The British Chambers of Commerce's Quarterly Economic Survey is now in its 36th year as the largest UK private sector survey of business sentiment. The survey is a leading indicator of UK GDP growth and is closely watched by policymakers, including HM Treasury and the Bank of England.           
About the QES